State RegulationsTX specificDifficulty 2/5
A Texas HMO discovers that an enrollee honestly misstated her weight on the enrollment application, and the misstatement would not have changed the HMO's decision to enroll her. May the HMO cancel her coverage on that basis?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under TIC 843.208, fraud or intentional misrepresentation of a material fact is a recognized ground for cancelling an evidence of coverage, but an innocent mistake is not. The misstatement must be both material, meaning it is something the HMO would have relied on in enrolling the person or setting the charge, and made with intent to deceive. A good-faith error that would not have affected the enrollment decision cannot be used to terminate coverage, and doing so would be an improper cancellation.
Why the other options are wrong
- B) Not every error is a ground; immaterial or unintentional mistakes do not support cancellation.
- C) Delaying the termination does not turn an innocent error into a lawful ground.
- D) Coverage can be cancelled for proper grounds such as nonpayment of charges, so an HMO is not locked in regardless of the enrollee's conduct.
Memory hook
Honest mistakes are not fraud: material plus intentional, or no cancellation.